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PP RUEHTRO
DE RUEHTU #0069/01 0231344
ZNR UUUUU ZZH
P 231344Z JAN 08 ZDK
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 4327
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0950
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7596
RUEHEG/AMEMBASSY CAIRO PRIORITY 1543
RUEHLO/AMEMBASSY LONDON PRIORITY 1407
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0944
RUEHFR/AMEMBASSY PARIS PRIORITY 1879
RUEHRB/AMEMBASSY RABAT PRIORITY 8480
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0178
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4173
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCPCIM/CIMS NTDB WASHDC PRIORITY

UNCLAS SECTION 01 OF 09 TUNIS 000069 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA (HATCHER AND KAMBARA) AND NEA/MAG (HARRIS) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (REITZE), AND 
CLDP (TEJTEL AND MCMANUS) 
USDOC PASS USPTO (ADAMS, BROWN AND MARSHALL 
CASABLANCA FOR FCS (ORTIZ) 
EGYPT FOR FCS (MOEZIE) AND FINANCIAL ATTACHE (SEVERENS) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB OPIC USTR TS
SUBJECT: TUNISIA: 2008 INVESTMENT CLIMATE STATEMENT 
 
REF: 07 STATE 158802 
 
¶1. Tunisia's 2008 Investment Climate Statement. Topics covered 
include: 
 
Paragraph -- Topic 
2 -- Openness to Foreign Investment 
12 -- Conversion and Transfer Policies 
17 -- Expropriation and Compensation 
18 -- Dispute Settlement 
21 -- Performance Requirements and Incentives 
30 -- Right to Private Ownership and Establishment 
33 -- Protection of Property Rights 
37 -- Transparency of Regulatory System 
39 -- Efficient Capital Markets and Portfolio Investment 
44 -- Political Violence 
45 -- Corruption 
48 -- Bilateral Investment Agreements 
50 -- OPIC and Other Investment Insurance Programs 
51 -- Labor 
54 -- Foreign Trade Zones/Free Trade Zones 
56 -- Foreign Direct Investment Statistics 
 
------------------------------ 
Openness to Foreign Investment 
------------------------------ 
 
¶2.  The Tunisian government actively encourages foreign direct 
investment (FDI) and has made attracting FDI a top priority.  The 
government encourages export-oriented FDI and screens potential FDI 
to minimize the impact of the investment on domestic competitors and 
employment. 
 
¶3. Foreign investment in Tunisia is regulated by the Investment Code 
Law No. 93-120, dating from December 1993.  It covers investment in 
all major sectors of economic activity except mining, energy, the 
financial sector and domestic trade. 
 
¶4. The Tunisian Investment Code divides potential investments into 
two categories: (1) Offshore, in which foreign capital accounts for 
at least 66 percent of equity and at least 80 percent of production 
is destined for the export market, and (2) On-shore, in which 
foreign equity is limited to 49 percent in most non-industrial 
projects.  (On-shore industrial investment can have up to 100 
percent foreign equity). 
 
¶5. The legislation contains two major hurdles for potential FDI: (1) 
Foreign investors are denied national treatment in the agriculture 
sector.  Foreign ownership of agricultural land is prohibited, 
although land can be secured through long-term (up to 40 years) 
lease.  However, the government actively promotes foreign investment 
in agricultural export projects.  (2) For onshore companies outside 
the tourism sector, government authorization is required if the 
foreign capital share exceeds 49 percent and can be difficult to 
acquire. 
 
¶6. Investment in manufacturing industries, agriculture, 
agribusiness, public works, and certain services requires only a 
simple declaration of intent to invest.  Other sectors can require a 
series of Government of Tunisia authorizations. 
 
¶7. The Government of Tunisia allows foreign participation in its 
privatization program and a significant share of Tunisia's FDI in 
recent years has come from the privatization of state-owned or 
state-controlled enterprises.  Privatizations have occurred in 
telecommunications, banking, manufacturing, and petroleum 
distribution, among others.  In 2006, TECOM Investments and Dubai 
Investment Group (DIG) purchased a 35 percent stake, valued at US 
$2.25 billion, in state-owned Tunisie Telecom.  Major FDI has also 
entered the financial sector via the partial privatization of the 
UIB (Union Internationale de Banques) in 2002 and the privatization 
of Banque du Sud, since renamed Attijari Bank, in late 2005. 
 
TUNIS 00000069  002 OF 009 
 
 
 
¶8. There is no evidence of consistent discrimination against foreign 
investors either at the time of initial investment or at a later 
stage.  Tunisia's investment promotion authorities have established 
a system of regulations that has received favorable feedback from 
the US companies it has assisted.  A US investor in electricity 
production successfully lobbied for a change in Government of 
Tunisia legislation which permitted the investment to proceed. 
Another US investor received Government of Tunisia support in a 
dispute over the application of Investment Code incentives.  A major 
"greenfield" investment in manufacturing has been completed and is 
operational.  The US investor has warmly praised the Foreign 
Investment Promotion Authority (FIPA) for its continuing support 
from the outset of the project. 
 
¶9. Nevertheless, there are difficulties, particularly when US 
companies have attempted to launch projects in sectors in which the 
Government of Tunisia does not actively promote.  Until recently the 
Government discouraged foreign investment in service sectors such as 
restaurants, real estate, and retail distribution, but there are 
signs of relaxation of this policy.  In particular, FDI in retail 
distribution is expanding rapidly.  French multinational retail 
chain Carrefour opened its first store in 2001, followed by the 
entry of French retail company Gant in 2005.  There has also been 
significant Persian Gulf investment in the real estate sector. 
Currently, Tunisian law does not authorize franchising as the rule 
but it tolerates, on a case by case basis, labor intensive 
franchising projects that could create new jobs.  The Government of 
Tunisia has announced it is drafting an amendment to its law on 
distribution, which could ease restrictions on franchise operations. 
 
 
¶10. FDI in certain state monopoly activities (electricity, water, 
postal services) can be carried out following establishment of a 
concession agreement.  There are also certain restrictions on trade 
activities.  With few exceptions, domestic trading can only be 
carried out by a company set up under Tunisian law, in which the 
majority of the share capital is held by Tunisians and management is 
Tunisian.  An additional barrier to non-EU investment results from 
Tunisia's Association Agreement with the European Union.  The EU is 
providing significant funding to Tunisia for major investment 
projects, but clauses in the agreement prohibit non-EU member 
countries from participation in many EU-funded projects. 
 
¶11. In June, the Ministry of Development and International 
Cooperation and the Foreign Investment Promotion Agency (FIPA) 
Tunisia holds an annual investment promotion event, the Carthage 
Investment Forum, to introduce the Tunisian investment environment 
and its business opportunities to global investors. 
 
-------------------------------- 
Conversion and Transfer Policies 
-------------------------------- 
 
¶12. The Tunisian dinar is not a fully convertible currency, and it 
is illegal to take dinars in or out of the country.  Although it is 
convertible for current account transactions (i.e. most bona fide 
trade and investment operations), Central Bank authorization is 
needed for some foreign exchange operations.  The Government of 
Tunisia predicts full convertibility of the dinar is not likely 
before 2009. 
 
¶13. Nonresidents are exempt from most exchange regulations.  Under 
foreign currency regulations, nonresident companies are defined as 
having: (1) Nonresident individuals who own at least 66 percent of 
the capital, and (2) Capital financed by imported foreign currency. 
 
 
¶14. Foreign investors may transfer returns on direct or portfolio 
investments at any time and without prior authorization.  This 
applies to both principal and capital in the form of dividends or 
interest.  US companies have generally praised the speed of 
 
TUNIS 00000069  003 OF 009 
 
 
transfers from Tunisia, but lamented that long delays may occur in 
some operations. 
 
¶15. There is no limit to the amount of foreign currency that 
visitors can bring into Tunisia and exchange for Tunisian dinars. 
Amounts exceeding the equivalent of 25,000 Tunisian dinars 
(approximately US $19,200) must be declared at the port of entry. 
Non-residents must also report foreign currency imports if they wish 
to re-export or deposit more than 5,000 Tunisian dinars (roughly US 
$4,000).  Tunisian customs authorities may require production of 
currency exchange receipts on exit. 
 
¶16. The dinar is traded on an intra-bank market.  Trading operates 
around a managed float established by the Central Bank (based upon a 
basket of the Euro, the US dollar and the Japanese yen).  The 
dollar/dinar value fluctuates on a daily basis, with the dollar 
trading most recently (January 2008) at approximately 1.2 TND.  In 
2007, the TND appreciated roughly 5 percent against the US dollar 
and depreciated 3.8 percent against the Euro. 
 
------------------------------ 
Expropriation and Compensation 
------------------------------ 
 
¶17. The Tunisian government has the right to expropriate property by 
eminent domain; there is no evidence of consistent discrimination 
against US and foreign companies or individuals.  There are no 
outstanding expropriation cases involving US interests and such 
cases are rare.   No policy changes on expropriation are anticipated 
in the coming year. 
 
------------------ 
Dispute Settlement 
------------------ 
 
¶18. There is no pattern of significant investment disputes or 
discrimination involving US or other foreign investors.  However, to 
avoid misunderstandings, contracts for trade and investment projects 
should always contain a clause detailing how eventual disputes 
should be handled and the applicable jurisdiction.  Tunisia is a 
member of the International Center for the Settlement of Investment 
Disputes and is a signatory to the 1958 New York Convention on the 
Recognition and Enforcement of Foreign Arbitral Awards. 
 
¶19. The Tunisian legal system is based upon the French Napoleonic 
code.  There are adequate means to enforce property and contractual 
rights.  Although the Tunisian constitution guarantees the 
independence of the judiciary, the judiciary is not fully 
independent of the executive branch.  Local legal experts assert 
that courts are susceptible to political pressure. 
 
¶20. The Tunisian Code of Civil and Commercial Procedures does allow 
for the enforcement of foreign court decisions under certain 
circumstances.  Commercial disputes involving US firms are 
relatively rare.  In cases were disputes have occurred, US firms 
have generally been successful in seeking redress through the 
Tunisian judicial system. 
 
--------------------------------------- 
Performance Requirements and Incentives 
--------------------------------------- 
 
¶21. Performance requirements are generally limited to investment in 
the petroleum sector or in the newer area of private sector 
infrastructure development.  These requirements tend to be specific 
to the concession or operating agreement (e.g., drilling a certain 
number of wells or producing a certain amount of electricity).  More 
broadly, the preferential status (offshore, free trade zone) 
conferred upon some investments is linked to both percentage of 
foreign corporate ownership and limits on production for the 
domestic market. 
 
 
TUNIS 00000069  004 OF 009 
 
 
¶22. The Tunisian Investment Code and subsequent amendments provide a 
broad range of incentives for foreign investors, which include tax 
relief on reinvested revenues and profits, limitations on the 
value-added tax on many imported capital goods, and optional 
depreciation schedules for production equipment. 
 
¶23. In order to encourage employment of new university graduates, 
the government will bear the full cost of the employee's salary for 
the first two years of employment, and then a portion of the salary 
for the next five years.  The government will also pay initial 
training costs for new graduates. 
 
¶24. Large investments with high job creation potential may benefit, 
under certain conditions determined by the Higher Commission on 
Investment, from the use of state-owned land for a symbolic Tunisian 
dinar (less than one US dollar).  Investors who purchase companies 
in financial difficulty may also benefit from certain clauses of the 
Investment Code; these advantages are determined on a case-by-case 
basis. 
 
¶25. Additional incentives are available to promote investment in 
designated regional investment zones in economically depressed areas 
of the country, and throughout the country in the following sectors: 
health, education, training, transportation, environmental 
protection, waste treatment, and research and development in 
technological fields. 
 
¶26. Further benefits are available for investments of a specific 
nature.  For example, companies producing at least 80 percent for 
the export market receive tax exemptions on profits and reinvested 
revenues, duty-free import of capital goods with no local 
equivalents, and full tax and duty exemption on raw materials and 
semi-finished goods and services necessary for the business. 
 
¶27. Foreign companies resident in Tunisia face a number of 
restrictions related to the employment and compensation of 
expatriate employees.  Tunisian law limits the number of expatriate 
employees allowed per company to four.  There are lengthy renewal 
procedures for annual work and residence permits.  Although rarely 
enforced, legislation limits expatriate work permit validity to a 
total of two years.  Central Bank regulations impose administrative 
burdens on companies seeking to pay for temporary expatriate 
technical assistance from local revenue.  For example, a foreign 
resident company that has brought in an accountant would have to 
document that the service was necessary, fairly valued, and 
unavailable in Tunisia before it could receive authorization to 
transfer payment from its operations in Tunisia.  This regulation 
prevents a foreign resident company from paying for services 
performed abroad. 
 
¶28. Foreign investments and above a certain ceiling require special 
authorization.  The annual ceiling for foreign investments (without 
special authorization) is currently one million TND (about US 
$780,500) or three million TND (about US $2.34 million) for 
exporting companies.  According to the recently announced measures, 
companies registered domestically will no longer need permission to 
increase their capital and non-residents will be allowed to freely 
manage their corporate accounts. 
 
¶29. For US passport holders, a visa is not necessary for stays of up 
to four months; however, a residence permit is required for longer 
stays. 
 
-------------------------------------------- 
Right to Private Ownership and Establishment 
-------------------------------------------- 
 
¶30. Tunisian government actions clearly demonstrate a strong 
preference for offshore, export-oriented FDI.  Investors in that 
category are generally free to establish and own business 
enterprises and engage in most forms of remunerative activity. 
Investment which competes with Tunisian firms or on the Tunisian 
 
TUNIS 00000069  005 OF 009 
 
 
market or which is seen as leading to a net outflow of foreign 
exchange may be discouraged or blocked. 
 
¶31. Acquisition and disposal of business enterprises can be 
complicated under Tunisian law and depend on the nature of the 
contract specific to the proposed transaction. 
 
¶32. Disposal of a business investment leading to reductions in the 
labor force may be challenged or subjected to substantial employee 
compensation requirements.  Acquisition of an on-shore company may 
require special authority from the Government if it is an industry 
subject to limits on foreign equity shareholding (such as in the 
services sector). 
 
----------------------------- 
Protection of Property Rights 
----------------------------- 
 
¶33. Secured interests in property are both recognized and enforced 
in Tunisia. Mortgages and liens are in common use.  Tunisia is a 
member of the World Intellectual Property Organization (WIPO) and 
has signed the United Nations (UNCTAD) Agreement on the Protection 
of Patents and Trademarks.  The agency responsible for patents and 
trademarks is the National Institute for Standardization and 
Industrial Property (INNORPI - Institut National de la Normalisation 
et de la Propriete Industrielle).  Foreign patents and trademarks 
should be registered with INNORPI. 
 
¶34. Tunisia's patent and trademark laws are designed to protect only 
owners duly registered in Tunisia.  In the area of patents, US 
businesses are guaranteed treatment equal to that afforded to 
Tunisian nationals.  Tunisia updated its legislation to meet the 
requirements of the WTO agreement on Trade-Related aspects of 
Intellectual Property (TRIPS).  Copyright protection is the 
responsibility of the Tunisian Copyright Protection Organization 
(OTPDA - Organisme Tunisien de Protection des Droits d'Auteur), 
which also represents foreign copyright organizations.   New 
legislation now permits customs officials to inspect and seize goods 
if copyright violation is suspected. 
 
¶35. Tunisian Copyright Law (No. 36/1994) has been updated to cover 
new technologies, but its application and enforcement have not 
always been consistent with foreign commercial expectations.   Print 
audio and video media are considered particularly susceptible to 
copyright infringement, and there is evidence of significant retail 
sale of illegal products in these media.  Illegal copying of 
software/CDs/DVDs is widespread. 
 
¶36. Although the concept and application of intellectual property 
protection is still in the early stages, the Government is making an 
effort to build awareness and has increased its enforcement efforts 
in this area.  These efforts have led a major supermarket chain to 
halt the sale of pirated audio and video goods.  A US 
government-backed initiative, operated by the Department of Commerce 
in conjunction with United States Patent and Trademark Office 
(USPTO) provides training for Tunisian officials in the field of IPR 
regulation enforcement.  The Government of Tunisia has announced 
that new IPR legislation is being drafted which will improve 
enforcement capabilities and strengthen punishment for offenders. 
 
--------------------------------- 
Transparency of Regulatory System 
--------------------------------- 
 
¶37. The Tunisian government has adopted policies designed to promote 
foreign investment and to prepare Tunisian industry for free 
competition with foreign markets.   Although the 1994 amendment to 
the Investment Code substantially improved, standardized, and 
codified incentives for foreign investors, some aspects of existing 
tax and labor laws remain impediments to efficient business 
operations. 
 
 
TUNIS 00000069  006 OF 009 
 
 
¶38. Bureaucratic procedures, while slowly improving in some areas, 
are cumbersome and time-consuming.  Foreign employee work permits, 
commercial operating license renewals, infrastructure-related 
services, and customs clearance for imported goods are usually cited 
as the lengthiest and most opaque procedures in the local business 
environment.  Investors have commented on inconsistencies in the 
application of regulations.  These cumbersome procedures are not 
limited to foreign investment and also affect the domestic business 
sector. 
 
--------------------------------------------- ----- 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ----- 
 
¶39. The mobilization and allocation of investment capital are still 
hampered by the underdeveloped nature of the local financial system. 
 Tunisia's financial markets only finance roughly 8 percent of 
Tunisia's economy.  Tunisia's stock market has begun to attract more 
investment in the past several years, but the number of companies 
listed remains low at just 50.  In 2007, the stock market's 
benchmark index, Tunindex, gained 20 percent after gaining 44 
percent in 2006.  Capital controls are still in place.  Foreign 
investors are permitted to purchase shares in resident firms 
(through authorized brokers) or to purchase indirect investments 
through established mutual funds. 
 
¶40. The banking system is considered generally sound and is 
improving as the Central Bank has begun to enforce adherence to 
international norms for reserves and debt.  Recent measures include 
actions to strengthen the reliability of financial statements, 
enhance bank credit risk management, and improve creditors' rights. 
Revisions to banking laws tightened the rules on investments and 
bank licensing, and increased the minimum capital requirement.  The 
required minimum risk-weighted capital/asset ratio has been raised 
to 8 percent, consistent with the Basel Committee capital adequacy 
recommendations.  Despite the strict new requirements, many banks 
still have substantial amounts of non-performing or delinquent debt 
in their portfolios.  The Government has established debt recovery 
entities (societes de recouvrement de creances) to buy the non- or 
under-performing debt of commercial banks.  There is no public 
information available on the success of this measure. 
 
¶41. In recent years, the government has undertaken a number of 
banking privatizations and consolidations.  Even after recent 
privatizations, the government is the controlling shareholder in 10 
of the 20 banks.  The estimated total assets of the country's five 
largest banks are about US $10 billion.  Foreign participation in 
their capital has risen significantly and is now well over 20 
percent. 
 
¶42. Credit is available locally to foreign investors, but some 
industry observers assert that there exists a well-established 
collusion among the principal banks to set common interest rates. 
 
¶43. In the last five years regulatory and accounting systems have 
been brought more in line with required international standards. 
Most of the major global accounting firms are represented in 
Tunisia.  Tunisian firms quoted on the stock exchange are required 
to publish semiannual corporate reports audited by a certified 
public accountant. 
 
------------------ 
Political Violence 
------------------ 
 
¶44. Tunisia is a stable country and incidents involving 
politically-motivated damage to economic projects or infrastructure 
are extremely rare.  In April 2002, al-Qaeda took responsibility for 
at an attack at the synagogue on the island of Djerba that claimed 
20 victims, 14 of them German tourists.  This resulted in a 
significant reduction in the number of European visitors in the 
immediate aftermath of the attack, but the sector has now recovered. 
 
TUNIS 00000069  007 OF 009 
 
 
  In December 2006 and January 2007, Tunisian security forces 
disrupted a terrorist group, killing or capturing many individuals 
who reportedly planned to carry out acts of violence in Tunisia. 
The US Embassy in Tunis was reportedly among the group's intended 
targets. 
 
---------- 
Corruption 
---------- 
 
¶45. Tunisia's penal code devotes 11 articles to defining and 
classifying corruption and to assigning corresponding penalties 
(including fines and imprisonment).  Several other legal texts also 
address broader concepts of corruption including violations of the 
commercial or labor codes, which range from speculative financial 
practices to giving or accepting bribes.  Detailed information on 
the application of these laws or their effectiveness in combating 
corruption is not publicly available.  There are no statistics 
specific to corruption.  The Tunisian Ministry of Commerce publishes 
information on cases involving the infringement of the commercial 
code, but these incidents range from non-conforming labeling 
procedures to price/supply speculation.  The print media report 
abuses of fiduciary authority by public officials only on rare 
occasions.  Anecdotal reports from the Tunisian business community 
and US businesses with regional experience suggest that corruption 
exists, but is not as pervasive as that found in neighboring 
countries.  After several years of steady improvement, Tunisia's 
ranking on Transparency International's (TI) Corruption Index has 
dropped from 43 in 2005 to 61 (out of 179 countries) in 2007 with a 
score of 4.2.  According to the TI Corruption Index scale, a score 
of ten indicates extremely little corruption and a score of zero 
very serious corruption. 
 
¶46. Most US firms involved in the Tunisian market have not 
identified corruption as a primary obstacle to foreign direct 
investment.  Some potential investors have asserted that unfair 
practices and corruption among prospective local partners have 
delayed or blocked specific investment proposals, or there has been 
an appearance that cronyism or influence peddling has affected some 
investment decisions. 
 
¶47. The government's recent efforts to combat corruption have 
concentrated upon ensuring that price controls are respected, 
enhancing commercial competition in the domestic market, and 
harmonizing Tunisian laws with those of the European Union.  The 
public sector is governed by a comprehensive 1989 law designed to 
regulate each phase of public procurement and established the Higher 
Market Commission (CSM -Commission Superieure des Marches) to 
supervise the tender and award of major government contracts.  The 
government publicly supports a policy of transparency and has called 
for it in the conduct of privatization operations.  Public tenders 
require bidders to provide a sworn statement that they have not and 
will not, either themselves or through a third party, make any 
promises or give gifts with a view to influencing the outcome of the 
tender and realization of the project.  Pursuant to the US Foreign 
Corrupt Practices Act (FCPA), the US government requires that 
American companies requesting US government advocacy support with 
foreign governments sign an undertaking not to participate in 
corrupt practices. 
 
------------------------------- 
Bilateral Investment Agreements 
------------------------------- 
 
¶48. A Trade and Investment Framework Agreement (TIFA) between 
Tunisia and the United States was signed in 2002 and two TIFA 
Council meetings have taken place.  A Bilateral Investment Treaty 
between Tunisia and the United States took effect in 1991.  A 1985 
treaty (and 1989 protocol) guarantees US firms freedom from double 
taxation. 
 
¶49. Tunisia has concluded bilateral trade agreements with 
 
TUNIS 00000069  008 OF 009 
 
 
approximately 60 countries.  In January 2008, Tunisia's Association 
Agreement with the EU went into effect eliminating tariffs on 
industrial goods with the eventual goal of creating a free trade 
zone between Tunisia and the EU member states.  In addition, Tunisia 
is signatory of the multilateral agreements with the Multilateral 
Investment Guarantee Agency (MIGA).  Tunisia has signed the 
Agreement on WTO, bilateral agreements with the Member States of the 
European Free Trade Association (EFTA), bilateral and multilateral 
agreements with Arab League members, and a bilateral agreement with 
Turkey. 
 
-------------------------------------------- 
OPIC and Other Investment Insurance Programs 
-------------------------------------------- 
 
¶50. OPIC is active in the Tunisian market and provides political 
risk insurance and other services to a variety of US companies. 
OPIC supports private US investment in Tunisia and has sponsored 
several reciprocal investment missions.  The 1963 OPIC agreement 
with Tunisia was revised and signed in February 2004. 
 
----- 
Labor 
----- 
 
¶51. Tunisian labor is readily available.  Tunisia has a labor force 
of approximately 3.5 million and a national literacy rate of about 
75 percent.  About 90 percent of the work force under 35 is 
literate.  The official unemployment rate is under 14 percent 
(although this is considerably higher in some regions). The figure 
does not include many who are underemployed. 
 
¶52. Nearly 80,000 new jobs must be created each year to keep 
unemployment at current levels, while sustained annual GDP growth of 
about 7 percent would be required in order to make significant 
inroads into the chronic unemployment figure.  The structure of the 
workforce has remained stable over the past 20 years (19 percent 
agriculture, 32 percent industry, and 49 percent commerce and 
services). 
 
¶53. The right to form a labor union is protected by law.  There is 
only one national labor confederation, the General Union of Tunisian 
Workers (UGTT - Union General des Travailleurs Tunisiens).  The UGTT 
claims about one third of the labor force as members, although more 
are covered by UGTT-negotiated contracts.  Wages and working 
conditions are established through triennial collective bargaining 
agreements between the UGTT, the national employers' association 
(UTICA - Union Tunisienne de l'Industrie, du Commerce et de 
l'Artisanat), and the Government of Tunisia.  These agreements set 
industry standards and generally apply to about 80 percent of the 
private sector labor force, whether or not individual companies are 
unionized.  The most recent wage agreements were completed in 2006 
and are valid through 2008.  The official minimum monthly wage in 
the industrial sector is 208 TND (about US $173) for a 40 hour week 
and 240 TND (about US $200) for a 48 hour week. 
 
------------------------------------ 
Foreign Trade Zones/Free Trade Zones 
------------------------------------ 
 
¶54. Tunisia has two free trade zones, one in the north at Bizerte, 
and the other in the south at Zarzis.  The land is state-owned, but 
the respective zones are managed by a private company.  Companies 
established in the free trade zones, officially known as "Parcs 
d'Activites Economiques," are exempt from most taxes and customs 
duties and benefit from special tax rates.  Goods are allowed 
limited duty-free entry into Tunisia for transformation and 
re-export.  Factories are considered bonded warehouses and have 
their own assigned customs personnel. 
 
¶55. However, companies do not necessarily have to be located in one 
of the two designated free trade zones to operate with this type of 
 
TUNIS 00000069  009 OF 009 
 
 
business structure.  In fact, the majority of offshore enterprises 
are situated in various parts of the country.  Regulations are 
strict, and operators must comply with the 1993 Investment Code. 
 
------------------------------------ 
Foreign Direct Investment Statistics 
------------------------------------ 
 
¶56. Total FDI in Tunisia is estimated at about US $19 billion.  It 
has contributed to the creation of over 2,765 companies and 
approximately 268,000 jobs.  Foreign investment in manufacturing 
industries producing for export has long been the major generator of 
jobs in Tunisia and has a large share of FDI.  In recent years, 
however, FDI in real estate, infrastructure, and the energy sector 
has been significant and growing.  In 2006, FDI totaled about US 
$1.1 billion or US $3.5 billion including the receipts from the 
partial privatization of state-owned Tunisie Telecom. 
 
¶57. Tunisia's largest single foreign investor is British Gas, which 
has developed the Miskar offshore gas field (US $650 million) and is 
investing a further US $500 million for new development.  Major 
foreign presence in other key sectors include telecommunications and 
electronics (Lucent, Alcatel, Ericsson, Siemens, Sony, Philips, 
Thomson, Huawei, ZTE), the automotive industry (Lear Corporation, 
Isuzu, Pirelli, Fiat, Idec), and food products (Nestle, Danone, 
Chambourcy). 
 
¶58. Major US company presence in Tunisia includes: Citibank, 
Coca-Cola, Crown Can, Eurocast (a joint venture with Palmer), 
ExxonMobil, Ford, General Motors, Hewlett Packard, Johnson Controls, 
Lear Corporation, Merck, Microsoft, Pfizer, Sara Lee (represented in 
Tunisia under the name of Essel Tunisie/DBA), Stream, and Sylvania. 
EVOL, originally part of an Italian-owned group producing safety 
footwear for the export market, was recently purchased by US 
investors and, with a staff of 4,000, is now the largest US employer 
in Tunisia.  In 2007, Pioneer Natural Resources expanded oil and gas 
drilling operations in Tunisia, bringing its total investments in 
Tunisia to roughly US $165 million. 
GODEC